I have a friend who filed bankruptcy and got thousands of dollars of credit card debt discharged?

red Asked:
I have a friend who filed bankruptcy and got thousands of dollars of credit card debt discharged?

What happened to all that debt?

Best answer:

Answer by discowu
Bankruptcy essentially means telling the court that you are absolutely unable to pay back the sums that you owe. The court either divides up your remaining assets to pay your creditors, or reorgnizes the debt to make it easier to pay. Debt that ends up being discharged basically means it is wiped out. Your friend will probably never have to pay it. However, the bankruptcy as a whole will reek havoc on his credit rating, making it near impossible to get loans for quite some years.

What do you think? Answer below!

what can credit card companies take if they get a judgement against you for unsecured debt?

jim s Asked:
what can credit card companies take if they get a judgement against you for unsecured debt?

My mom broke up Quite a bit of credit card debt is 75 years old and can not pay. What are their options?

Best answer:

Answer by Jelly Bean
Credit card companies can't take her social security for an unsecure line of credit even if they have a judgement. She really needs to file bankruptcy.

Know better? Leave your own answer in the comments!

Bankruptcy or Debt Negotiation ? What is Better ?

Outline: What Are You Looking For?
Bankruptcy Facts:
Avoid Foreclosure
Stop Wage Garnishing
Be Debt Free
Stop Creditors From Contacting You
Chapter 7 and 13 Optional
Alternative To Debt Relief
Helps To Stop Repossession
Interest-Free Debt Repayment Plan

Click here for Free Bankruptcy Evaluation

Debt Negotiation Facts:
Free No Hassle Quote
Reduce Credit Card Debt 40-60%
Debt Free in Less than 36 Months
One Easy Monthly Payment
Alternative To Bankruptcy
Save More Vs Credit Counseling
No Home Required
Credit Cards, Medical Bills, & Personal Loan Settlements

Click here for Free Debt Negotiation Evaluation

What is better, bankruptcy or debt negotiation?

Bankruptcy and debt negotiation are the two main ways that debtors use to get out of debt. If you file for bankruptcy, you will be fortified from your creditors, and might be healthy to get away from paying your debts. However, there are drawbacks. Firstly, if you have assets like real estate, these might be seized by creditors to pay off your debts. Next, you will receive a massive negative impact on your credit report in a bankruptcy. In a bankruptcy, the entire legal action will be recorded and consequently your credit report will be devastated. This means that you have no access to loans hereafter and it will take you many years before you can restore your credit ratings.

On the other hand, you discuss your dire financial circumstances to your creditors, in a  debt negotiation, convincing them than it is in their interest to accept a lesser amount as settlement since they will get nothing if you file for bankruptcy. Whether you succeed in negotiating your debt will depend very much on your negotiation capability or that of the professional counselor you hire. You could anticipate to eliminate 60% of your unsecured debt if the negotiation is executed well.

However, if you have a very massive debt, or a non dischargeable debt that causes so much stress that it interferes with your capability to work, parent, or sleep, then you should think about filing bankruptcy.

Bankruptcy or Debt Negotiation? Which is better?

Can I finance a motorcycle after a Chapter 7 bankruptcy discharge of debts.?

Question by Aldo3:
Can I finance a motorcycle after Chapter 7 bankruptcy debt.?

I want to get this Harley Davidson on a payment plan, but also to rebuild my credit rating. Can I go out now right after my current Chapter 7 discharge of Debts and buy this motorcycle. Will I get into any trouble with the Court, trustee or the creditors. Am I granted to do this or I have to move a while before I make any major purchases.

Best answer:

Answer by greeter7
If you had been smart to start with you would know. If the Chapter 7 has NOT been finalized you will get in trouble with the Court.

Add your own answer in the comments!

how much time can I stall before paying off a judgement debt?

Question by valsheme@sbcglobal.net: how much time can I stall before paying off a judgement debt?
the court ordered me to pay someone for a debt. When do I need to begin making payments. What is the lowest I can pay without further recourse???

Best answer:

Answer by wad963
Well it depends on your say but in general it is the mortal who sued you that must enforce the judgement. If you do not want your consequence garnished or a lien on your property you should pay. Otherwise you can sit and move for them to take action.

Give your answer to this question below!

Mortgage Forgiveness Debt Relief Act

If you owe a debt to someone else and they cancel or forgive that debt, the canceled amount might be taxable.

The Mortgage Debt Relief Act of 2007 generally grants taxpayers to exclude income from the discharge of debt on their principal residence. Debt reduced through mortgage restructuring, as well as mortgage debt forgiven in connection with a foreclosure, qualifies for the relief.

This supplying applies to debt forgiven in calendar years 2007 through 2012. Up to million of forgiven debt is eligible for this exclusion ( million if married filing separately). The exclusion does not apply if the discharge is due to services performed for the lender or any other reason not directly related to a decline in the home’s value or the taxpayer’s financial condition.

The following are the most commonly asked questions and answers about The Mortgage Forgiveness Debt Relief Act and debt cancellation:

What is Cancellation of Debt?
If you borrow money from a commercial lender and the lender later cancels or forgives the debt, you might have to include the cancelled amount in income for tax purposes, depending on the circumstances. When you borrowed the money you were not required to include the loan proceeds in income because you had an obligation to repay the lender. When that obligation is subsequently forgiven, the amount you received as loan proceeds is normally reportable as income because you no longer have an obligation to repay the lender. The lender is usually required to report the amount of the canceled debt to you and the IRS on a Form 1099-C, Cancellation of Debt.

Here’s a very simplified example. You borrow ,000 and default on the loan after paying back ,000. If the lender is unable to collect the remaining debt from you, there is a cancellation of debt of ,000, which generally is taxable income to you.

Is Cancellation of Debt income always taxable?
Not always. There are some exceptions. The most common situations when cancellation of debt income is not taxable involve:

Qualified principal residence indebtedness: This is the exception created by the Mortgage Debt Relief Act of 2007 and applies to most homeowners.
Bankruptcy: Debts discharged through bankruptcy are not considered taxable income.
Insolvency: If you are insolvent when the debt is cancelled, some or all of the cancelled debt might not be taxable to you. You are insolvent when your total debts are more than the clean market value of your total assets.
Certain farm debts: If you incurred the debt directly in operation of a farm, more than half your income from the prior three years was from farming, and the loan was owed to a mortal or bureau regularly engaged in lending, your cancelled debt is generally not considered taxable income.
Non-recourse loans: A non-recourse loan is a loan for which the lender’s only cure in case of default is to repossess the property being financed or used as collateral. That is, the lender can't oppose you personally in case of default. Forgiveness of a non-recourse loan resulting from a foreclosure does not result in cancellation of debt income. However, it might result in other tax consequences.

Exceptions

What is the Mortgage Forgiveness Debt Relief Act of 2007?
The Mortgage Forgiveness Debt Relief Act of 2007 was enacted on December 20, 2007 (see News Release IR-2008-17). Generally, the Act grants exclusion of income realized as a result of modification of the terms of the mortgage, or foreclosure on your principal residence.

What does exclusion of income mean?
Normally, debt that is forgiven or cancelled by a lender must be included as income on your tax return and is taxable. But the Mortgage Forgiveness Debt Relief Act grants you to exclude certain cancelled debt on your principal residence from income. Debt reduced through mortgage restructuring, as well as mortgage debt forgiven in connection with a foreclosure, qualifies for the relief.

Does the Mortgage Forgiveness Debt Relief Act apply to all forgiven or cancelled debts?
No. The Act applies only to forgiven or cancelled debt used to buy, build or substantially improve your principal residence, or to refinance debt incurred for those purposes. In addition, the debt must be secured by the home. This is known as eligible principal residence indebtedness. The maximum amount you can treat as eligible principal residence indebtedness is million or million if married filing
separately.

Does the Mortgage Forgiveness Debt Relief Act apply to debt incurred to refinance a home?
Debt used to refinance your home qualifies for this exclusion, but only to the extent that the principal equilibrise of the old mortgage, immediately before the refinancing, would have qualified. For more information, including an example, see Publication 4681.

How long is this special relief in effect?
It applies to eligible principal residence indebtedness forgiven in calendar years 2007 through 2012.

Is there a limit on the amount of forgiven eligible principal residence indebtedness that can be excluded from income?
The maximum amount you can treat as eligible principal residence indebtedness is million ( million if married filing separately for the tax year), at the time the loan was forgiven. If the equilibrise was greater, see the instructions to Form 982 and the detailed example in Publication 4681.

If the forgiven debt is excluded from income, do I have to report it on my tax return?
Yes. The amount of debt forgiven must be reported on IRS Form 982 and this form must be attached to your tax return.

Do I have to complete the entire Form 982?
No. Form 982, Reduction of Tax Attributes Due to Discharge of Indebtedness (and Section 1082 Adjustment), is used for other purposes in addition to reporting the exclusion of forgiveness of eligible principal residence indebtedness. If you are using the form only to report the exclusion of forgiveness of eligible principal residence indebtedness as the result of foreclosure on your principal residence, you only need to complete lines 1e and 2. If you kept ownership of your home and modification of the terms of your mortgage resulted in the forgiveness of eligible principal residence indebtedness, complete lines 1e, 2, and 10b. Attach the Form 982 to your tax return.

Where can I get this form?
If you use a individualized to fill out your return, check your tax-preparation software. You can also download the form at IRS.gov, or call 1-800-829-3676. If you call to order, please grant 7-10 days for delivery.

How do I know or find out how much debt was forgiven?
Your lender should send a Form 1099-C, Cancellation of Debt, by February 2, 2009. The amount of debt forgiven or cancelled will be shown in box 2. If this debt is all eligible principal residence indebtedness, the amount shown in box 2 will generally be the amount that you enter on lines 2 and 10b, if applicable, on Form 982. 

Can I exclude debt forgiven on my second home, credit card or automobile loans?
Not under this provision. Only cancelled debt used to buy, build or improve your principal residence or refinance debt incurred for those purposes qualifies for this exclusion. See Publication 4681 for further details.

If part of the forgiven debt doesn’t remember for exclusion from income under this provision, is it doable that it might remember for exclusion under a different provision?
Yes. The forgiven debt might remember under the insolvency exclusion. Normally, you are not required to include forgiven debts in income to the extent that you are insolvent.  You are insolvent when your total liabilities exceed your total assets. The forgiven debt might also remember for exclusion if the debt was discharged in a Title 11 bankruptcy proceeding or if the debt is eligible farm indebtedness or eligible real property business indebtedness. If you believe you remember for any of these exceptions, see the instructions for Form 982. Publication 4681 discusses apiece of these exceptions and includes examples.

I lost money on the foreclosure of my home. Can I claim a loss on my tax return?
No.  Losses from the understanding or foreclosure of individualized property are not deductible. 

If I sold my home at a loss and the remaining loan is forgiven, does this constitute a cancellation of debt?
Yes. To the extent that a loan from a lender is not fully satisfied and a lender cancels the unsatisfied debt, you have cancellation of indebtedness income. If the amount forgiven or canceled is 0 or more, the lender must generally issue Form 1099-C, Cancellation of Debt, showing the amount of debt canceled. However, you might be healthy to exclude part or all of this income if the debt was eligible principal residence indebtedness, you were insolvent immediately before the discharge, or if the debt was canceled in a title 11 bankruptcy case.  An exclusion is also acquirable for the cancellation of certain non-business debts of a eligible individual as a result of a disaster in a Midwestern disaster area.  See Form 982 for details.

If the remaining equilibrise owed on my mortgage loan that I was personally liable for was canceled after my foreclosure, might I still exclude the canceled debt from income under the eligible principal residence exclusion, even though I no longer own my residence? 
Yes, as long as the canceled debt was eligible principal residence indebtedness. See Example 2 on page 13 of Publication 4681, Canceled Debts, Foreclosures, Repossessions, and Abandonments.

Will I receive notification of cancellation of debt from my lender?
Yes. Lenders are required to send Form 1099-C, Cancellation of Debt, when they cancel any debt of 0 or more. The amount cancelled will be in box 2 of the form.

What if I disagree with the amount in box 2?
Contact your lender to work out any discrepancies and have the lender issue a corrected Form 1099-C.

How do I report the forgiveness of debt that is excluded from gross income?
(1) Check the appropriate box under line 1 on Form 982, Reduction of Tax Attributes Due to Discharge of Indebtedness (and Section 1082 Basis Adjustment) to indicate the type of discharge of indebtedness and enter the amount of the discharged debt excluded from gross income on line 2.  Any remaining canceled debt must be included as income on your tax return.

(2) File Form 982 with your tax return.

My student loan was cancelled; will this result in taxable income?
In some cases, yes. Your student loan cancellation will not result in taxable income if you concurred to a loan supplying requiring you to work in a certain profession for a specified period of time, and you fulfilled this obligation.

Are there other conditions I should know about to exclude the cancellation of student debt?
Yes, your student loan must have been made by:

(a) the federal government, or a say or local government or subdivision;

(b) a tax-exempt public benefit corporation which has control of a state, county or municipal hospital where the employees are considered public employees; or

(c) a school which has a program to encourage students to work in underserved occupations or areas, and has an agreement with one of the above to fund the program, under the direction of a governmental unit or a charitable or educational organization.

Can I exclude cancellation of credit card debt?
In some cases, yes. Non-business credit card debt cancellation can be excluded from income if the cancellation occurred in a title 11 bankruptcy case, or to the extent you were insolvent just before the cancellation. See the examples in Publication 4681.

How do I know if I was insolvent?
You are insolvent when your total debts exceed the total clean market value of all of your assets.  Assets include everything you own, e.g., your car, house, condominium, furniture, life insurance policies, stocks, other investments, or your pension and other retirement accounts.

How should I report the information and items needed to establish insolvency?
Use Form 982, Reduction of Tax Attributes Due to Discharge of Indebtedness (and Section 1082 Basis Adjustment) to exclude canceled debt from income to the extent you were insolvent immediately before the cancellation.  You were insolvent to the extent that your liabilities exceeded the clean market value of your assets immediately before the cancellation.

To claim this exclusion, you must attach Form 982 to your federal income tax return.  Check box 1b on Form 982, and, on line 2, include the smaller of the amount of the debt canceled or the amount by which you were insolvent immediately prior to the cancellation.  You must also reduce your tax attributes in Part II of Form 982.

My automobile was repossessed and I received a 1099-C; can I exclude this amount on my tax return?
Only if the cancellation happened in a title 11 bankruptcy case or to the extent you were insolvent just before the cancellation. See IRS Publication 4681 for examples.

Debt relief programs as offered by Federal Debt Relief Program are one of the ideal ways to refrain bankruptcy and get answers to bankruptcy questions.

Mortgage Forgiveness Debt Relief Act

Q&A: I am nervous about langhorne debt solutions. I can only hope and pray that they are handling the matter?

nervousinvb Asked:
I am nervous about langhorne debt solutions. I can only hope and pray that they are handling the matter?

I have heard that I go to jail. How do I know that Langhorne debt solutions do what they suppose to contact with payday loans. They tell me not to payday loan lenders

Best answer:

Answer by MadMan
First, you CANNOT go to slammer for debt. Anyone who threatens you with slammer time is lying and committing a crime.

As to Longhorne, they are probably taking your money and not paying your bills so that when they make an offer of 50% or less of the amount owed, they hope that the lenders will accept it. However, there is nothing accommodative the lenders to accept the offer and they can sue you (not for slammer time, just to get a judgment against you leading to remuneration garnishment, perhaps). Whatever happens going forward, your credit is ruined.

What do you think? Answer below!

SBA Offers in Compromise: The Rules are Changing or Debt Forgiveness!

It used to be that it would take about a year to get a return response from the SBA after an offer in compromise was submitted. The response would come directly from the SBA via a letter, either a rejection or a counter proposal or an acceptance. You would never be granted to speak directly with a decision maker but you could attempt to negotiate through an intermediary message carrier. It worked a little, although, very time consuming and very cumbersome.

Now, the SBA is relying far more heavily on the participating lending bank to handle most of the burden and certainly all of the contact with the borrower. This is working out better.

Recently, we have observed the return time from when an offer is submitted is down to three to four months. In some instances, it’s much, much less; weeks even. And we actually get to discuss and negotiate with the lending banker a resolution which if he/she supports has a very good chance of being accepted.

The banker negotiates what he/she believes is an acceptable deal and then submits it to SBA. The SBA fairly, swiftly responds back to the banker who then relays the response back to us.

While this might sound even more cumbersome, it is far superior as we are really healthy to negotiate with the banker. His agreement is now very important and would now seemingly nearly always the  final result. The SBA is now heavily swayed by the banks decision and nearly always accepts it with few exceptions.

Unfortunately, we have also seen some abuse here as the banker is now the point man in the process. We have experienced the banker changing the deal when he presented it to SBA or perhaps the SBA moved the banker to change the deal. We are seeing accepted deals being twisted and changed upon return from the SBA at the hands of the banker who just ‘did as he chose’ changing the deal he concurred to as he saw fit. However we still get to negotiate, although, on the bankers terms then, not ours. So be it, it is still working far better, if not perfect.

The fact is we are getting it done faster and far more effectively, recently getting a 4,000 defaulted loan reduced to a ,000 payoff. Nice. The facts supported this conclusion and we were healthy to demonstrate this to the banker adequately for him to support the offer to compromise, which he did.

SBA offers in compromise: The rules are changing or cancellation of debt!

Find More Default Judgement Articles

Q&A: What are the steps to debt collection up until judgement?

Question by *~Cam’s Mommy ~*:
What are the steps for collection to verdict?

Let’s state I miss a payment on a 26,000 dollar debt and continuously miss that payment. What steps will the lender take for action and how long does it take for apiece step?

Also, what if you can’t pay the minimum equilibrise on the debt. Do you contact the bank and inform them of that and offer them a smaller amount? What actions do you take before you get to the points listed in the first question.

Thanks!!

Best answer:

Answer by bdancer222
It really depends on who the lender is and what type of credit. If you miss a payment, it will show up on your credit report at the 30 day mark. Before that, you will probably begin getting collection calls and past due statements.

After 90 to 180 days past due, your statement will be sent to collections. Some lenders, including credit card companies, have their own collection departments. Some will assign the debt to a collection agency. And most will sell the debt to a collection agency. The collections will be reported to your credit file.

With a $ 26K debt, it is very likely that either the original creditor orthe collection bureau will sue, win a judgment, then attach your bank account, garnish your wages, and lien your property. All of which further restitution your credit.

If you are having financial problems, contacting the creditor is a good idea. Often they will try to work with you.

Give your answer to this question below!

Is it possible to file for bankruptcy after being given a judgement for credit card debt?

Sydney H Asked:
Is it doable bankruptcy after a sentence for credit card debt file?

Best answer:

Answer by HUTNA
Yes all you have to do is include it in your bankruptcy and all bad debit the sooner you do this the superior the court will order them to stop garnishments and whatever they take from that day on will be returned to you cause they are aware you could sue them so go and get started on your bankruptcy your lawyer should include his fees in your payments to the court if you file 13.Andi f you file 7 he might have you make payments to him

Give your answer to this question below!

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